Friday, September 7, 2012

This paper estimates the household income growth rates
implied by food demand in a sample of urban Chinese households in 1993-2005.
Our estimates, based on Engel curves for food consumption, indicate an average per
capita income growth of 6.8 percent per year in 1993-2005. This figure is
slightly larger than the 5.9 percent per year obtained by deflating nominal
incomes by the CPI. We attribute this discrepancy to a small bias in the CPI,
which is of a similar magnitude to the one often associated with CPI in the United States.
Our estimates indicate stronger gains among the poorer households, suggesting
that inflation in China
was “pro-poor,” in the sense that the increase in the cost of living for poorer
households was smaller than for the average one.